TMI Blog2021 (6) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... eficiency in his explanation was that he could not buttress this explanation with supporting evidence i.e. confirmation from two persons viz. T. Ramkrishna S. Bhaskara Rao. Thus he failed to explain the source with support of evidence, but his explanation was not found to be false. The lapse committed at his end may authorise the AO to make addition, but that will not authorise the AO to visit the assessee with penalty. The explanation of the assessee ought to have been found as false by the AO. Nothing that sort of exercise has been made or any material discernible from the record. As far as interest part is concerned, it is a very small amount. There might have some minor discrepancy while calculating the interest at the time of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee, whose sources have not been explained, therefore, he made an addition of ₹ 14.00 lakhs to the total income of the assessee. Appeal to the CIT(A) did not bring any relief to the assessee. It was informed to me that even addition was confirmed at the level of the Tribunal also. The ld.AO thereafter initiated penalty proceeding against the assessee under section 271(1)(c) of the Act. After hearing the assessee he imposed penalty of ₹ 6,74,150/-. Dissatisfied with the penalty order, the assessee filed appeal before the ld.CIT(A). The appeal has been dismissed ex parte . 3. It has been brought to my notice that during the pendency of the appeal, the assessee has died. Therefore, no one made appearance before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to visit the assessee with concealment of income or furnishing of inaccurate particulars of income. In this way, the ld.counsel for the assessee contended that the assessee does not deserve to be visited with penalty. On the other hand, the ld.DR relied upon orders of the Revenue authorities. 4. I have duly considered rival contentions and gone through the record carefully. Section 271(1)(c) of the Income Tax Act, 1961 has direct bearing on the controversy. Therefore, it is pertinent to take note of the section. 271. Failure to furnish returns, comply with notices, concealment of income, etc. (1) The Assessing Officer or the Commissioner (Appeals) or the CIT in the course of any proceedings under this Act, is satisfied that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any assessee with the penalty, the Assessing Officer or the Learned CIT(Appeals) during the course of any proceedings before them should be satisfied, that the assessee has; (i) concealed his income or furnished inaccurate particulars of income. As far as the quantification of the penalty is concerned, the penalty imposed under this section can range in between 100% to 300% of the tax sought to be evaded by the assessee, as a result of such concealment of income or furnishing inaccurate particulars. The other most important features of this section is deeming provisions regarding concealment of income. The section not only covered the situation in which the assessee has concealed the income or furnished inaccurate particulars, in certain si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd all the facts relating to the same and material to the computation of the total income have been disclosed by the assessee. These two situations provided in Explanation 1 appended to section 271(1)(c) makes it clear that that when this deeming fiction comes into play in the above two situations then the related addition or disallowance in computing the total income of the assessee for the purpose of section 271(1)(c) would be deemed to be representing the income in respect of which inaccurate particulars have been furnished. 6. In the light of the above, let me examine the facts of the present case. A perusal of the record would indicate that the ld.AO has visited the assessee with penalty under section 271(1)(c) of the Act for additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d may authorise the AO to make addition, but that will not authorise the AO to visit the assessee with penalty. The explanation of the assessee ought to have been found as false by the AO. Nothing that sort of exercise has been made or any material discernible from the record. As far as interest part is concerned, it is a very small amount. There might have some minor discrepancy while calculating the interest at the time of filing of the return. Considering all these aspects, I am of the view that the assessee does not deserve to be visited with penalty. I allow this appeal, and delete the impugned penalty. 7. In the result, appeal of the assessee is allowed. Order pronounced in the Court on 4th June, 2021 at Ahmedabad. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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